Option Investor
Printer friendly version
Jeff Bailey : 2/22/2008 10:22:03 PM

Closing U.S. Market Watch found at this Link

OI Technical Staff : 2/22/2008 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 2/22/2008 6:09:36 PM

Current OPEN MM Profiles that I've made at this Link

CLOSED/Stopped on the 1/3 position in the StreetTracks Gold (GLD) at $92.90.

With oil holding firm above "left shoulder" of potential h/s top and natural gas surging higher, decided it best to CLOSE out the UltraShort Oil & Gas (DUG) at $39.58. Iran and Venezuela teaming up doesn't hold much of a bearish trader's conviction (in my opinion). Rather let T. Boone take the risk near term.

Jeff Bailey : 2/22/2008 5:29:18 PM

Closing Internals found at this Link

Jeff Bailey : 2/22/2008 5:29:14 PM

Ambac Rescue May Be Announced Monday or Tues: ... Reuters (source) Link

ABK $10.71 +16.03% ...

Jeff Bailey : 2/22/2008 4:46:07 PM

I tried to get some with a LIMIT order of $72.00. No luck. Extended session low $73.97.

Jeff Bailey : 2/22/2008 4:45:19 PM

Genentech (DNA) $71.59 -0.22% ... released for trade ... $78.00 extended.

Keene Little : 2/22/2008 4:41:22 PM

Depending on the snow conditions in the mountains I might be "out of the office" on Monday. My wife and I are headed away for a weekend of skiing and will stay there on Monday if the conditions are good. I'll have my laptop (to check the weather for more snow--wink) and should be able to check in now and again so I'll make some commentary when and if I can. I need some fresh air and a couple of speed runs to clear the ol' noggin. Have a great weekend.

Jeff Bailey : 2/22/2008 4:31:17 PM

CHC Helicopter (FLI) said earlier today it was being taken private.

Keene Little : 2/22/2008 4:29:57 PM

The updated SPX 60-min chart shows upside potential now, from a Fib projection standpoint, at 1379 and then 1411. It needs to rally above 1369 to make the short term bullish wave count (pink) the more likely one. Link

The more bearish wave count (dark red) continues to be very bearish--it's still playing out a series of 1st and 2nd waves to the downside and calls for some hard selling as the 3rd waves start to unfold. This is becoming less and less likely as price continues to chop around but strictly from an EW perspective it remains a possibility.

A geopolitical event or bad news over the weekend could open the market down huge with this kind of bearish wave count. This is one risky market, either way, at the moment.

Jeff Bailey : 2/22/2008 4:29:47 PM

DNA still halted ... no time specification for lift Link

Jeff Bailey : 2/22/2008 4:28:52 PM

FDA Grants Accelerated Approval of Avastin ... Press Release Link

Jeff Bailey : 2/22/2008 4:18:56 PM

BIX.X went from 256 to finish 265.85 +1.92% in the matter of 35 minutes.

Keene Little : 2/22/2008 4:14:27 PM

The updated DOW 60-min chart shows price remains in a slightly expanding triangle pattern for the pullback since Feb 13th. From a bullish perspective (pink count), today's low marked the end of a b-wave pullback and now we're ready for a strong rally in wave-C. Interestingly, in this pattern, two equal legs up from the January low is at 13276 right at the downtrend line from October. Link

A 900-point rally from here is not something bears are going to want to fight. So that's the upside potential and a break above 12572 would be a buy signal for this pattern. Until that happens it's equally possible the rally will fail at or below the downtrend line from Feb 1st, currently just under 12440. A break of today's low at 12155 would be a bearish heads up and below 12070 confirmation that a more significant breakdown is playing out.

Follow-through is the key for this market and so far there isn't any. Trading lightly and getting out of the way quickly remains the suggested trading method. These are tough times to trade.

Jeff Bailey : 2/22/2008 4:09:04 PM

CNBC saying it is "accelerated approval"

Jeff Bailey : 2/22/2008 4:08:37 PM

Genentech: Avastin Gets Approval For Breast Cancer Treatment

Jeff Bailey : 2/22/2008 4:06:32 PM

TRIN goes out 0.54!

Jane Fox : 2/22/2008 4:03:00 PM

Economic Reports on Monday's docket include:

8:30a.m. Jan Chicago Fed Natl Activity Index. Previous: -0.91.

10:00a.m. Jan Existing Home Sales. Previous: -2.2%.

10:30a.m. Feb Dallas Fed Mfg Production Index. Previous: 17.7%.

Jeff Bailey : 2/22/2008 4:01:38 PM

Had to be a news leak regarding Berkshire that had Treasuries seeing selling and cash lined up for equities. When it hit the wires, sellers vanished.

Linda Piazza : 2/22/2008 4:00:20 PM

What a week and what a day. If you survived it, give yourself a pat on the back. The SPX and OEX have zoomed up through an entire channel's width in a few minutes' time. I've harped on needing to have those profit-protecting plans in place because sometimes you have only moments to react in this market, and that was certainly true today.

Linda Piazza : 2/22/2008 3:57:03 PM

If the SPX ends the day near here, it will end it with a doji on the daily chart or a small-bodied candle with a long lower shadow. Last night, I said if these were normal times, we might see something like this, but these weren't normal times. You can't act on what you see developing on the charts because you don't believe it when you see it.

Jane Fox : 2/22/2008 3:55:58 PM

Here is a daily chart of the SPX. I find it amazing this market has traded within this narrow range for such a long time. It is hard to determine which way it will break and I find the MACD is not giving may clues either.

Jeff Bailey : 2/22/2008 3:55:10 PM

US Envoy: Security Council May Add Sanctions Vs. Iran Next Week

Jeff Bailey : 2/22/2008 3:54:31 PM

Swing trade bearish long exit alert! ... I say we blow out the UltraShort Oil & Gas (DUG) at the bid of $39.58 -1.46% ...

Linda Piazza : 2/22/2008 3:54:23 PM

Potential Keltner resistance on 15-minute closes at 1345.06 for the SPX and 620 for the OEX is being tested again.

Jeff Bailey : 2/22/2008 3:52:55 PM

Uh, uh ...

Keene Little : 2/22/2008 3:52:23 PM

It has all the appearances of another "manufactured" rally but don't argue with price (guess who will win). Late Friday is not the time to try to get back at the market. Let it go and we'll pick it back up on Monday. Unfortunately the price pattern continues to be ugly and choppy (continuing from the start of this month) so I could argue equally strongly for a rally and a decline come Monday. I think carrying a position over the weekend is an unnecessary risk

Jeff Bailey : 2/22/2008 3:51:21 PM

Moody's Cuts Channel Re, MBIA's Reinsurer

Jeff Bailey : 2/22/2008 3:50:54 PM

Here we go ...

Jeff Bailey : 2/22/2008 3:50:01 PM

Genentech (DNA) $71.60 -0.20% ... Halted for trade. (News Pending)

Jeff Bailey : 2/22/2008 3:48:48 PM

Berkshire Backs Over 100 Muni Bonds In Last Two Days

CNBC Story Link

Linda Piazza : 2/22/2008 3:45:29 PM

Amazing. The SPX is already at potentially strong resistance: the central basis line for the Keltner channels that I watch. That's at about 1345 with the SPX now at 1344.99 but doing some jumping around. We know, of course, that there's historical resistance in the 1346-1347 level, too, so bulls now need to have their profit-protecting plans in place. For the OEX, that central basis line resistance is at 620.06. The OEX hit it almost to the penny but is now at 618.88. OEX bulls need to have their profit-protecting plans in place now, too. First bears, now bulls.

Jeff Bailey : 2/22/2008 3:45:23 PM

Venezuela Chavez: $100 Oil Is A Fair Price Now
Will Do Anything To Push Oil Up In OPEC.
Earmarks $1 Per Barrel Of Oil For Healthcare

Jane Fox : 2/22/2008 3:42:53 PM

Well it looks like the 3rd time was the charm today.

Linda Piazza : 2/22/2008 3:42:25 PM

The USDJPY dropped down to 106.71, into that potentially strong support level I've been mentioning and then has since shot higher again. It's at 107.14 as I type, having already approached potentially strong resistance near 107.24-107.30. What does this mean for equities? It means that the bounce was corroborated but that bulls need to be on the lookout now. They don't want to see the USDJPY strongly repelled.

Jeff Bailey : 2/22/2008 3:42:08 PM

ABK $10.03 +8.34% ...

Jeff Bailey : 2/22/2008 3:39:49 PM

TOL $21.08 +0.28% ...

Keene Little : 2/22/2008 3:39:44 PM

A 100-point rally in the DOW back to green in less than 5 minutes. Ah the wonder of a short covering spike. Glad I had lowered my stop--gave back a bunch but it could have been worse.

Jeff Bailey : 2/22/2008 3:39:36 PM

MBI $11.95 +0.42% ...

Linda Piazza : 2/22/2008 3:37:56 PM

Breakout above the resistance that has held most of the day. The SXP and OEX first broke to new lows, but they couldn't sustain them even through a 15-minute close, and that was the key. Bears have had all day to prepare their what-if strategies, and those strategies now need to be put into effect. The gains could fail when some key level is hit, but one scenario for the day has always been a doji-type day, and that may indeed be what we get.

Jeff Bailey : 2/22/2008 3:37:29 PM

TSO $39.49 +1.90% ... finds a bid.

Jeff Bailey : 2/22/2008 3:37:15 PM

Good gravy!

Jeff Bailey : 2/22/2008 3:35:22 PM

FICO '08 Found To Be Illegal

DJ - Fair Isaac Corporation (FICO) is the company which designs and implements the most universally accepted personal credit scoring model used today. It is commonly known as the FICO score. The three major credit reporting agencies, Equifax, Experian, and TransUnion, utilize a FICO model which considers "authorized user" accounts when generating a person's credit score. This model is in compliance with the Equal Credit Opportunity Act (ECOA). The legislative intent and stated purpose of the ECOA was and remains in force to protect consumers from discriminatory and unethical practices in lending.

Nevertheless, FICO recently proposed a new scoring model, dubbed FICO '08, which will completely disregard authorized user accounts, as they appear on an individual's personal credit file. This new scoring model is projected to adversely affect 41 million Americans with respect to their credit scores.

Let us be clear, the proposed FICO '08 scoring model is illegal, pursuant to the Equal Credit Opportunity Act. One can review the following pertinent provision of the ECOA and find this to be true:

(6) Credit history. To the extent that a creditor considers credit history in evaluating the creditworthiness of similarly qualified applicants for a similar type and amount of credit, in evaluating an applicant's creditworthiness a creditor shall consider:

(i) The credit history, when available, of accounts designated as accounts that the applicant and the applicant's spouse are permitted to use ...

As anyone can discern, the law clearly states that "any" account which an applicant is permitted to use must be considered. This certainly envelopes authorized user accounts. With that in mind, it is only reasonable to forecast a windfall of class litigation that very well may affect the bottom lines at the Fair Isaac Corporation, the credit reporting agencies, and any lending or banking institution that uses the new FICO '08 scoring model. This is why only one credit reporting agency was set to implement the changed model back in September 2007. The other two were going to sit back and wait for the fallout.

The reasons given for the so-called need for this change are many, but they are in essence a call for relief from the mortgage industry. After the sub-prime mortgage industry fell through the bottom, they needed an explanation for their shareholders. Rather than admit to the truth, which was that they were approving applicants with low FICO scores at 100% of a property's value and at nearly 60% Debt to Income Ratios, they blamed a small niche of consumers who knew how to operate astutely under the FICO model to increase their scores within the confines of the law; "credit piggybackers," as they have been recently referred to, like Denver based BoostMyScore.NET.

Should all three credit reporting agencies enact the change, it would not affect most consumers until sometime in mid 2008, if they apply the change in a retroactive nature. The fallout could be substantial as the changeover will undoubtedly exacerbate the ever worsening financial and credit positions of the average American consumer. An onslaught of class action lawsuits and wasted tax payer money will certainly follow as a result.

Companies like BoostMyScore.NET remain optimistic and do not foresee FICO '08 moving forward as proposed, in light of its illegality; and as such, they plan to continue to offer Platinum account trade lines to Americans in need of a quick and easy FICO score boost.

Keene Little : 2/22/2008 3:34:09 PM

Now, will there be any follow through or did someone big (with a little help from our Fed friends feeding money to the major banks) just decide to smack the shorts? This could definitely feed on itself but the risk is that the flare-up will suddenly tuck tail and reverse right back down.

Keene Little : 2/22/2008 3:32:39 PM

Wow, there's the short covering!

Jeff Bailey : 2/22/2008 3:24:37 PM

Germany's DAX-20 ($DAX) Link ... finished the week down 98 points, or -1.43% at 6,806. Session Low/High was 6,763/6,889. So break of bullish support trend, and Os to 6,800.

That's not bullish.

Keene Little : 2/22/2008 3:22:47 PM

No real surprise--breaking down again. Into the last hour I'd place my stop on a short play right above the last bounce. Ride this down and as we get closer to the close starting trailing your stop lower as well. Take as much home to Momma as you can.

Jeff Bailey : 2/22/2008 3:21:33 PM

FTSE-100 ($FTSE) Link ... finished the week down 43 points, or -0.74% at 5,889. Session high/low was 5,970/5,864. So no action.

Jeff Bailey : 2/22/2008 3:17:21 PM

Internals sure don't suggest any type of rally.

Linda Piazza : 2/22/2008 3:16:54 PM

When I mentioned "intervening" support, I wanted to point out one level of intervening support for the SPX. The SPX's 200-week exponential moving average is now at 1322.58. The OEX is already below that moving average, at 620.03 for the OEX.

Jeff Bailey : 2/22/2008 3:16:11 PM

03:00 Internals found at this Link

Linda Piazza : 2/22/2008 3:15:00 PM

A downturn now means nothing more than chopping around within congestion until the SPX and OEX move below and sustain values below their lows of the day. The SPX now has a potential downside target of 1320.71 if it can do that, and the OEX, 609.38, but both have potential support all through the intervening space, so be protective of bearish profits.

Linda Piazza : 2/22/2008 3:07:32 PM

Do or die time for the SPX and OEX bears and bulls. Historical and Keltner resistance, as well as trendline resistance (previous trendline off recent intraday lows) all converge near 1335-1335.50 for the SPX and 614.80-615.25 for the OEX. We could all see that approaching support, especially on the OEX, as I'm far from the only technician and Keltner channels are far from the only method used to see potentially strong support in the 610-611.50 zone. It's no surprise some tried to front-run the buying, but bulls have to accomplish more than this, too. So far, it's just consolidation at the bottom of the range, but both bulls and bears should have what-if plans in case of a breakout of the midday congestion zone in either direction.

Jeff Bailey : 2/22/2008 3:00:13 PM

Equity rally into the weekend?

Jeff Bailey : 2/22/2008 2:59:31 PM

Now seeing YIELD reversals in 10-year ... 5-year just inched green.

Jeff Bailey : 2/22/2008 2:57:27 PM

Just saw "bad ticks" in QQQQ to $42.60. Getting a chart ready to show you.

Jeff Bailey : 2/22/2008 2:49:51 PM

What I began to draw from the 02/14/08 work and NAV/PRICE was that the "junk bond" market (using PHF as a guide) didn't see much more than 10% downside.

Right now, about the only US-based equity index that I could draw a trend from that seemed "reasonable" based on my "Moderate Recession for 2008" was the QQQQ/NDX.

Jeff Bailey : 2/22/2008 2:46:53 PM

Recent 02/14/08 update was NAV of $8.33 as PHF closed $8.11. Link

Jeff Bailey : 2/22/2008 2:44:40 PM

Haven't gotten a weekly update on PHF's NAV since 2/14/08. Link

Keene Little : 2/22/2008 2:43:37 PM

While it's possible we're hammering out a bottom here, I believe the more likely scenario is that we're consolidating before another leg down. I see no reason to buy the market yet. I'll be interested in trying it, maybe, at SPX 1318. Short is still the place to be but pull your stop down a little as we get closer to the last hour. Short covering into the close is always a possibility, even though it currently looks like we'll get selling into the close instead.

Jeff Bailey : 2/22/2008 2:42:13 PM

Might want to mark the closing YIELDS on the major Treasuries 02/07/08 close.

That would be a day when PHF actually traded sligh PREMIUM to its NAV.

Jeff Bailey : 2/22/2008 2:39:22 PM

30-year ($TYX.X) ... reversing price gains. YIELD now up 1.6 bp at 4.569% ...

Linda Piazza : 2/22/2008 2:34:08 PM

The SPX's 15-minute 9-ema is now at 1330.83. Next resistance at 1332.08 and then 1334.70. For the OEX, those numbers are 613.15, 613.68 and 614.91. Bears want the highest of those numbers to hold as resistance on 15-minute closes if there's a bigger bounce.

Jeff Bailey : 2/22/2008 2:31:53 PM

US Official: 6 Countries To Meet Monday On Iran Actions

Jeff Bailey : 2/22/2008 2:15:00 PM

Pakistan's Independent TV Station Goes Off Air; Blames Government

Keene Little : 2/22/2008 2:12:28 PM

Earlier I updated the GOOG and CME daily charts and showed each pointing to a little more downside before finding a tradeable bottom (and consequently giving us a heads up that the broader market might do the same). AAPL looks the same--I've got a Fib projection for the 5th wave down in its decline from December at 99.34 (a nice 50% haircut in two month's time): Link

As the monthly chart shows, and what the bulls in any symbol need to keep in mind, don't overstay your welcome in a parabolic rise (think commodities right now): Link

Linda Piazza : 2/22/2008 2:08:49 PM

Another bear-flag looking climb, but this flag is wider, with the possibility of carring the retracement higher. So far, the SPX and OEX versions are not making much upside progress, however, but neither are they falling to new lows. If they don't soon, the formations are going to look more like triangles than bear flags, with a slightly more neutral connotation.

Keene Little : 2/22/2008 2:02:28 PM

The current bounce looks, once again, corrective. The stair-stepping lower looks like it will continue. I think SPX 1318 makes for a good downside target.

Keene Little : 2/22/2008 2:00:20 PM

Jane did a good job at explaining her target and stop system of trading, and it works for her. One thing I'd like to add is that her 1:1 risk/reward ratio requires a better than 50% win ratio of wins vs. losses (obviously).

Since many traders find a 40% win rate is considered a good win rate, they look for a 2:1 or an even better 3:1 setup before they'll take the trade. If they don't see the reward side of the trade at least twice what they're willing to risk they'll pass on the trade.

This is why paper trading a system is very important--you must determine, over time, what your win ratio is AND your per trade win vs. loss. Then you can trade real money when it looks like your trading system is working for you. Notice how Jane has been reviewing her results and has gone back to back testing and trying different things--she's recognizing that the market is different right now.

Keep a spreadsheet, review it regularly and tweak as required. It amazes me how many traders have no clue what the "statistics" of their trades are. If you want to treat this business as a profession then do what professionals do--keep accurate records and constantly review what works and doesn't work for you. In this way you'll also be able to figure out when you're out of synch (and trade lightly) or in synch (and trade more aggressively).

Jane Fox : 2/22/2008 1:57:42 PM

These countertrend trades should have their stops below daily lows and if I had put it there on the my 2nd attempt we would still be in the trade.

Linda Piazza : 2/22/2008 1:52:07 PM

Consider again the potential for the SPX and OEX to rise to the other sides of their smallest Keltner channels, now at 1335.62 and 615.29, respectively. There's potential resistance at those levels on 15-minute closes. The rise through the channels isn't promised but is possible again.

We're in a stop-running time of day, so be careful as big money tests either support or resistance or both and decides which way to send markets next. Don't think of them as tricking us or deliberately running stops but rather as seeing whether it's safe to buy or better to distribute. They've got a lot of money at stake and they need to know.

Jane Fox : 2/22/2008 1:47:16 PM

James - I sent an email to you but it came back undeliverable. I will try again.

Linda Piazza : 2/22/2008 1:41:25 PM

Although I said I didn't think a move up through the SPX and OEX channels looked imminent in my 1:35:10 posts, I said it should be considered as a possibility. The charge higher must have begun just about as soon as that post uploaded. I would have been closer if I'd said it was imminent, but there's nothing like the markets to show you up from time to time. I'm glad I at least got the post out just before the rise began, to offer that warning. However, neither the SPX nor the OEX was able to progress all the way across their smallest channels, both closing the last 15-minute period below their 9-ema's, now at 1332.06 for the SPX and 613.71 for the OEX. Neither has yet confirmed that resistance by a drop to a new low, however. Remember the potential support for the OEX from 610-611 or maybe even up to 611.50. The SPX's is a little further away, at about 1321 if new lows are reached and sustained. It may be the OEX that determines what happens next--breakdown through next support or bounce from it--since it's so close already to potential support.

Jane Fox : 2/22/2008 1:37:19 PM

Jane, would you like a hand saw to go with that limb? I'm looking for a bottom today too but without success

Yes Mark please send me that dang saw!!!

Linda Piazza : 2/22/2008 1:35:10 PM

The USDJPY at its low of the day but is close to potentially significant support that's now extending from about 106.65-106.70. The USDJPY is 106.73 as I type.

Jane Fox : 2/22/2008 1:34:35 PM

Well the bears are once again able to overcome the bulls, daily lows were tagged but not breached.

Jane Fox : 2/22/2008 1:28:56 PM

OK here I go out on a limb again (why do I do this?). I think the daily lows are in.

Jeff Bailey : 2/22/2008 1:25:13 PM

01:00 Internals found at this Link

Jane Fox : 2/22/2008 1:22:43 PM

Target is 12253 but I am going to move it down due to market conditions and the fact that this is a countertrend trade. Target will be at 12249 not much of an adjustment but I also will be moving the stop up as we move into profit.

Jeff Bailey : 2/22/2008 1:20:40 PM

Here's something I'd like subscribers to do.

Go back and look at YOUR 2008 hypothesis regarding the US economy.

Now take a trend line from the 1/22/08 relative low, and take the other end of the trend to December'08.

IF the lows are in, then the extension of the trend could become the longer-term trend.

For you PnF-ers, just take a 45-degree angle from the lowest O on your PnF chart.

Jane Fox : 2/22/2008 1:20:27 PM

This long from 12211 has very high odds of making at least some profit.

Jeff Bailey : 2/22/2008 1:16:28 PM

Today's New Lows at both the big board and NASDAQ are now the most since January 23.

New bears, or old will likely assess risk to the recent relative highs.

Linda Piazza : 2/22/2008 1:13:54 PM

The SPX's 15-minute 9-ema is now at 1332.64; the OEX's, at 613.97. Sometime during the lunchtime lull, it's common for those averages to flatten and for the SPX and OEX to trade across them to the other side of their smallest channels. Those channel lines are now at1336.73 for the SPX and 615.80 for the OEX. The averages don't yet look flattened enough that such a move seems imminent, but you never know. Keep it in mind as possibility.

Jeff Bailey : 2/22/2008 1:06:08 PM

Oil is largest weighting in CRB. You know what its "round number" is at this point.

Jeff Bailey : 2/22/2008 1:05:29 PM

The "potential" is there for the Dollar to find its bottom at the base of you "Bailey Wave" support channel, and CRB to see some reverse from 400.00. GLD in the middle of its "Bailey Wave" is what this GLD bull was trying to protect against.

Jeff Bailey : 2/22/2008 1:04:01 PM

A "round number" I think commodity traders are looking at is the CRB Index. It has traded 399.22 today.

Keene Little : 2/22/2008 1:01:08 PM

Another bounce and it looks the same--it will probably break to another low. It's looking like we could stair-step lower to the SPX 1318 area. In case this leg down is finishing a larger A-B-C pullback correction from the Feb 13th high, the c-wave will achieve 162% of the a-wave (pink wave count on this updated 60-min chart) at 1318. It would make for a nice retest of the February low and get the bulls excited: Link

A bounce off this A-B-C pullback would have an upside target near 1402 so it would make for a very nice long trade next week. But if SPX breaks much below 1317 then the larger pattern points to at least a test of the January low (1270).

Jane Fox : 2/22/2008 1:00:12 PM

Stop will be 12169 and the target 1:1 risk to reward ratio. Mike you know what this means now! :)

Jane Fox : 2/22/2008 12:59:15 PM

Ok let's try this again. YM long at 12211. alert

Jeff Bailey : 2/22/2008 12:59:13 PM

GLD $93.37 +0.12% ... smack in the middle of "Bailey Wave"

Jane Fox : 2/22/2008 12:58:51 PM

McMillan Weekly commentary - The stock market has failed to respond to intermediate-term buy signals. It may still do so, but this is a bit of a worrisome fact. If this condition persists -- as it did in 2002 -- we plan to delve more deeply into the reason why (as we did at that time). Otherwise, if the market breaks out to the upside, as the indicators seem to indicate that it will, then we will not be overly concerned with a small mistake in timing.

The chart of the S&P 500 ($SPX) has tightened down into a small range, at the end of another tightening formation -- a "wedge" of sort. All of this is within a large trading range. Even so, volatility remains high. Finally, all of this is taking place within a larger trading range, bounded by 1315-1320 on the downside and 1390-1400 on the upside. So, the market is range-bound. When it breaks out -- especially out of the latter range it should make a decisive move. But which way will it be? At this point, we favor the odds of an upside breakout, but nothing is certain in this continuing, nervous market.

The equity-only put-call ratios are both on intermediate-term buy signals and that is one reason why we favor an upside breakout. Market breadth (advances minus declines) has not been good, and breadth indicators remain on sell signals that they issued some time ago. This is our most negative indicator.

Finally, the volatility indices ($VIX and $VXO) have continued to decline, and thus their charts are bullish. As long as $VIX maintains its current downtrend, it is bullish. Moreover, the spike peak buy signal from $VIX, of an intermediate-term nature, remains in place. If $VIX were to close above 27, that would negate this positive signal.

In summary, put-call ratios and $VIX and positive. Breadth is negative, and $SPX is rather neutral, being constrained within several types of ranges. So, while the weight of this evidence is not overwhelming, it is bullish intermediate-term. However, we would respect an $SPX breakout, no matter which way it occurs.

Jeff Bailey : 2/22/2008 12:57:36 PM

USO $78.24 +1.17% ... was trading $77.31.

Jeff Bailey : 2/22/2008 12:55:32 PM

US Dollar Index (DXY) 75.52 -0.10% (30-minute delayed) ... will note that at 10:15:31 as GLD traded my stop of $92.90, DXY would have been trading 75.52-ish.

Linda Piazza : 2/22/2008 12:55:27 PM

The SPX and OEX have been testing their 15-minute 9-ema's and are tentatively turning down again. If bearish, you want the resistance confirmed by a drop to a new low. Be careful now as tentative next support is approached, at least on the OEX. That's at about 610-611 for the OEX. The decline off yesterday's high has been steep and occurring in a fairly tight descending price channel. The slope of that channel is too steep to be preserved. At some point, prices will either just cascade lower as bulls give up or else there's going to break up through resistance and a harder bounce than has been seen so far while prices were captured inside these narrow, narrow channels. Be prepared for either eventuality as support is approached. Support on the 15-minute chart for the SPX is at about 1321.

Jeff Bailey : 2/22/2008 12:44:58 PM

EIA: Various product inventory levels that I track Link

Distillates were just about even with last year, largely due to ULS diesel's rise. But ULS Diesel showed "shut down" taking place at refiners last week.

Jane Fox : 2/22/2008 12:35:09 PM

So the stops are much easier to figure out.

Jane Fox : 2/22/2008 12:34:46 PM

I will always adjust a stop around a swing low or high and then around the xxxx0 or xxxx5 number.

Jane Fox : 2/22/2008 12:33:33 PM

Oh, very good. So if I understand correctly, you first determine where the stop needs to be, then use that difference from the entry and add it to the entry and that becomes your target?

This is probably one of those "duh" moments, but I too wondered f you computed the target based on the distance of your stop from the entry. Gotcha.

I use the 1:1 ratio as a guideline but will adjust according to market conditions and swing highs and lows. ________________________________________

Linda Piazza : 2/22/2008 12:24:23 PM

The SPX's 15-minute 9-ema is now at 1333.97; the OEX's, at 614.59.

Linda Piazza : 2/22/2008 12:17:36 PM

The SPX and OEX have fallen out of their bear flags, confirmed by new lows. The SPX has a potential downside target now at 1321.50 and the OEX, at about 610. Remember not to count on those targets being met, but do assess the possibility that they will be and that profit-protecting plans need to be in place if and when they are.

Jeff Bailey : 2/22/2008 12:17:59 PM

Various Energy Futures @ 11:30 AM EST Link

Unleaded crack spreads deteriorated into oil's March expiration and oil inventory still well below year-ago (-7%). Gasoline inventory +4% Vs. year-ago levels.

Shortfall in heating oil and distillate vs. year-ago (-24% & -4.5%) has diesel and heating oil (primary distillates) holding positive crack spreads vs. oil.

Keene Little : 2/22/2008 12:14:23 PM

The break to new lows is bearish. Next potential support level is the February low.

Jane Fox : 2/22/2008 12:10:58 PM

Well our closer stop on the trade was well placed and we did "save" a little of our account. I am now looking for a reentry IF the market comes back.

Jane Fox : 2/22/2008 12:09:56 PM

I been having trouble setting the targets for these trades.

I'm ok getting in. I"m ok with stops, but I'm missing targets,

How are you setting those?

Ah setting stops and targets, then moving the stops as we move into profit is what I call "Dancing with the Markets." Everyone does a different dance according to his/her risk tolerance and account size but I like a 1:1 ratio on most trades. There are times when I have to give up a little on the profit side but putting your stop too close is one of the worst mistakes a trader can make.

Linda Piazza : 2/22/2008 12:01:18 PM

So far, we're still just seeing a bear-flag sort of rise off the low for the SPX and OEX, with each little jit and jot so far just hacking out the parameters for that flag.

The 30-minute 9-ema's have been more reliable resistance for the SPX and OEX than have the 15-minute versions, which sometimes hold lately and sometimes are violated, only to see the indices head back down. I wanted to give you those 30-minute versions. They're at 1339.76 for the SPX and 617.24 for the OEX.

Jane Fox : 2/22/2008 11:58:59 AM

One more thing if the countertrend trade does reach the level where we "should" have placed the stop, below daily lows, then comes back to our rentry - that trade has a very high probability of winning.

Jeff Bailey : 2/22/2008 11:55:32 AM

Top 5 Weighted in DUG are ... XOM, CVX, COP, SLB, OXY.

Jeff Bailey : 2/22/2008 11:55:29 AM

11:08 AM Money Flows Link ... I'd have to think BULL profit taking in some energy equities, but shorts firm in oil.

Jane Fox : 2/22/2008 11:51:47 AM

Ok just stopped on the trade. Now we have to see if it turns around and makes it to full profit. That would be very hard to take but yet verifies my thoughts on countertrend trades.

Linda Piazza : 2/22/2008 11:48:35 AM

The SPX's 15-minute 9-ema is now at 1336.16 with further potential resistance on 15-minute closes at 1337.78. For the OEX, those numbers are 615.62 and 616.23.

Jane Fox : 2/22/2008 11:47:57 AM

This kind of move against a countertrend trade is very typical and why you want to make sure your stop is far enough away to take this heat. I think the stop under daily lows would have me more comfortable but I will keep it where it is.

Keene Little : 2/22/2008 11:46:17 AM

So far the equity bounce off this morning's low is looking more bear flaggish than anything else. Pull your stop up a little closer if you bought the low. Better to be stopped out on a whipsaw move than to take a loss at this point. The bounce just isn't strong enough to give me the impression the low is going to hold.

Keene Little : 2/22/2008 11:37:19 AM

I check the price of lumber every now and then to see if it's giving us a heads up about the construction business. Since the high last summer the price of lumber has taken a nose dive but it may be putting in a bottom here. Yesterday's test of the January low is leaving a large bullish divergence and suggests the low is going to hold: Link

The larger pattern suggests we haven't seen the final low but it's looking like we'll see at least a larger bounce in the price of lumber as we head into spring. There could be a final low mid year as traders realize the construction business is not quite ready to recover.

Linda Piazza : 2/22/2008 11:34:56 AM

So far, the 15-minute 9-ema's are holding as resistance on 15-minute closes for both the SPX and OEX. Those averages are now at 1336.83 and 616.01, respectively. With the SPX and OEX both climbing in a bear-flag sort of climb, however, we can't be sure the challenge of those averages is over for the time being until and unless both the SPX and OEX drop to new lows. I'm not sure it will happen yet. They might just keep on chopping up in the alternating green-and-red small-bodied candle march that's been going on since the day's lows.

Jeff Bailey : 2/22/2008 11:30:28 AM

S&P Puts 28 Ratings On 2 American Home Mortgage Assets Dls On Watch Negative

Keene Little : 2/22/2008 11:27:05 AM

MER is pushing to a new daily high which is a good sign if you're thinking bullish. The only bad part of the bounce off yesterday's low is that it looks very corrective (overlapping highs and lows within the bounce) but as long as it keeps rallying it could be a bullish sign for today.

Jane Fox : 2/22/2008 11:23:39 AM

I am now long YM from 12246. A tinsy little spike up to 12247 triggered me. I also see a tinsy little swing low at 12211 so the stop at 12209 should be OK. alert

Jeff Bailey : 2/22/2008 11:22:07 AM

Bank Of Italy Seeks End To Mutual Fund Outflows

DJ (partial) - Bank Of Italy Governor Mario Draghi will meet with top managers of Italian asset-management companies Tuesday to discuss ways of stanching major cash outflows from stock, bond and money market mutual funds that some observers say could jeopardize the industry.

The move follows a record EUR53 billion in net outflows from Italian investment funds in 2007, which was compounded in January this year when a further EUR19.1 billion was pulled out. The Italian experience contrasts sharply with other European countries.

The central bank is concerned that savings - traditionally high and a significant asset for the economy - will continue to seek better conditions beyond Italy's borders, especially with regards to taxation.

"Let's face it - the main reason why we've seen big outflows from funds is that there are better conditions abroad," an industry official said.

According to the European Fund and Asset Management Association, the European investment fund industry has increased assets by 7.4%, or EUR559 billion, since the end of 2006. Eleven countries, including Denmark, Finland, Poland, Turkey and the U.K., saw above-average asset growth over that period. Only four countries reported a decrease: Italy, Netherlands, Greece and Portugal.

Keene Little : 2/22/2008 11:19:55 AM

Same with GOOG, not much of a change since Tuesday's update ( Link ), which we could say for the broader market as well. The pattern calls for another leg down before another bounce but a rally back above 541 would put it into at least a short term bullish pattern: Link

Jeff Bailey : 2/22/2008 11:12:14 AM

11:00 Internals at this Link

Yesterday's Internals Link

Linda Piazza : 2/22/2008 11:12:09 AM

The SPX's 15-minute 9-ema is now at 1337.74; the OEX's, at 616.58.

Keene Little : 2/22/2008 11:09:32 AM

Since Tuesday's update on CME ( Link ) there hasn't been much of a change. Price could consolidate a bit longer but so far the pattern still points to another leg down to at least a minor new low before bouncing again. Like the broader market right now, this pattern looks like it might chop up and down for at least another month: Link

Jane Fox : 2/22/2008 11:06:02 AM

If we get triggered on the long at 12246 I think the stop can be placed a little higher at 12209 and not below the daily lows at 12199. This may be a big mistake but I guess only time will tell. alert

Linda Piazza : 2/22/2008 11:01:12 AM

Here's what I wrote last night and the reason why I think we really won't know much about the day until we see what happens with this bounce: "[My] best-guess [for the] action tomorrow morning would be [for a] retreat further through the support zones . . . followed by a bounce attempt. If the day is moderately bullish, a doji-type day might be produced or indices might even bounce back to the top of their recent congestion zones. If they're not at all bullish, any bounce attempt would be met by selling and the indices would roll down again, either to produce a doji that closes on support again or into a real breakdown."

In Dr. Phil terms, I don't think the markets "get real" today until we see how the current bounce attempts play out. What's happened so far was pretty well easy to foresee, but what happens next is not. In my opinion.

Keene Little : 2/22/2008 10:57:20 AM

We got a bounce where it needed to happen so long is the place to be and your stop needs to be at a new daily low for now. If it continues lower again then the pattern turns at least more short term bearish and the last support level will have been broken. The next test would be the Febuary lows.

Jane Fox : 2/22/2008 10:50:02 AM

I have just had two successful trades on the Dow Futures (YM). I wanted to make sure this market was back on track before I profiled anymore here on the monitor. With that said I do see a countertrend long at 12246. Stop has to be below daily lows so the risk is greater (as I stated earlier) on these kind of trades. alert

Linda Piazza : 2/22/2008 10:49:01 AM

The SPX's 15-minute 9-ema is now at about 1338.80. The OEX's is at 617.20. If this bounce progresses, watch for resistance at those levels. Bears want that resistance to hold on 15-minute closes, if tested, since it converges with other important Keltner resistance. The bounce collapsed a bit while I typed.

Jeff Bailey : 2/22/2008 10:48:39 AM

DUG $40.85 +1.69% ...

Jeff Bailey : 2/22/2008 10:48:18 AM

Exxon/Mobil (XOM) $86.20 -0.82% ... slips below 50% conventional. 150-day and 50-day correlative SMA's held some sellers as did 61.8%.

Keene Little : 2/22/2008 10:45:40 AM

I had mentioned yesterday that we could see a throw-under below the bottom of the bull flag pattern for SPX, with the possibility for a drop down to near 1330. Any lower than that and it will look like a bonafide breakdown instead.

This morning's decline can be counted complete at this low now (just under 1331) so it has to bounce now otherwise it will clearly look more bearish.

Linda Piazza : 2/22/2008 10:44:50 AM

Here's the Keltner setup for OEX traders: The OEX currently tests potential Keltner support on 30-minute closes at 615.16. The OEX is obviously below that, but still in testing range, particularly as the 30-minute period has not concluded. If the OEX loses this support on a 30-minute close or drops so deeply below it during the 30-minute period that you assume that's it lost, barring a big bounce, then watch for next potential support at about 610.50-611. I wouldn't conclude yet that you can count on that 610-611 test.

These are short-term setups and not perfect guidelines, but guidelines nonetheless. So far, I would not concluded that the 30-minute support has been lost. If the OEX drops too much deeper, however, start watching for next support.

Linda Piazza : 2/22/2008 10:37:44 AM

If the SPX can't pull itself up soon and if it violates that support I just showed in my 10:30:09 post by either a too-big decline intra-30-minute period or a violation on a 30-minute close, it's got a potential downside target near 1323.

Jeff Bailey : 2/22/2008 10:31:20 AM

US Orders Embassy Dependents Out Of Belgrade

Keene Little : 2/22/2008 10:30:20 AM

SPX has now dropped down to the bottom of a potential bull flag pattern that I showed on last night's 60-min chart ( Link ) at 1334. This is a setup for a long play, tight stop.

Linda Piazza : 2/22/2008 10:30:09 AM

Here's what's being tested on the SPX's 30-minute Keltner chart, and it should be obvious why I'm watching this particular level for potential support on 30-minute closes: Link Support does not always hold, of course, and it may not this time, but it would be foolish not to have a what-if plan in case it does, whatever side of the trade you're on.

Jane Fox : 2/22/2008 10:29:26 AM

The VIX is confirming the S&P futures new daily lows so there is no doubt the bears have control. I like the countertrend trades but they add risk because you should have your stop just under daily lows yet you need confirmation the market is actually into a countertrend move and not just making noise.

Jane Fox : 2/22/2008 10:27:10 AM

AD line is now talking loud and clear at -1261

Linda Piazza : 2/22/2008 10:17:59 AM

For OEX traders: The OEX has dropped to that 616-617 target that was set yesterday. Remember that this is potential support, too, with that support extending down to Wednesday's 616.23 low and to the descending trendline off the 2/12 low, with that now at about 615. In other words, watch for bounce potential through here and keep a potential doji-type day scenario in mind as one possibility for today. I'm not saying it will happen, but I am saying that it's a possibility. The very fact that so many appearing now on CNBC and in other places anticipate that the breaks that we're seeing today will result in strong downdrafts make me a bit wary of counting too heavily on those strong downdrafts. I once anticipated those strong breaks, too, in whatever direction the markets broke out of those triangles, but the RUT's action up to today after trading sideways out of its triangle makes me al_rt to the possibility that maybe it won't happen the way we all envisioned it. That's why I'm watching the RUT today and urge that others keep it on the radar screen. Is it finally going to cave or is this just more congestion?

Jeff Bailey : 2/22/2008 10:17:40 AM

USD/CAD 1.0127

Jeff Bailey : 2/22/2008 10:17:17 AM

GBP/USD 1.96807

Jeff Bailey : 2/22/2008 10:17:00 AM

USD/JPY 107.01

Jeff Bailey : 2/22/2008 10:16:45 AM

EUR/USD 1.4827

Jeff Bailey : 2/22/2008 10:15:43 AM

GG $39.43 -2.28% ...

Jeff Bailey : 2/22/2008 10:15:31 AM

Swing trade stopped alert! ... for the 1/3 position in the StreetTracks Gold (GLD) $92.90 -0.38% ...

Jane Fox : 2/22/2008 10:15:26 AM

I have known Linda for years and let me assure you when Linda tells you she has done her homework - she has done her homework. I know of no one else who puts as much into learning as Linda and then you all get the advantage of her learning without doing the work. :)

Linda Piazza : 2/22/2008 10:11:31 AM

Wednesday's SPX low was 1336.55, and that should certainly be considered potential support. Multiple levels of support converge all the way down to 1334.50. Remember the doji potential and try to be aware of all possible scenarios today.

Jeff Bailey : 2/22/2008 10:09:47 AM


DJ- Shares jump 7% after the U.K.'s fifth-largest bank reports a 17% rise in full-year net profit despite write-downs, as substantial gains on disposals outpaced the negative impact from market turmoil. It hikes its full-year dividend by 5%.

Jeff Bailey : 2/22/2008 10:07:09 AM


DJ- The euro-zone economy shows signs of resilience in February, with composite Purchasing Managers Index rising unexpectedly to 52.7 from 51.8 in January, say sources. Meanwhile, factory orders in the area fall to their weakest since 2001.

Linda Piazza : 2/22/2008 10:06:46 AM

I agree wholeheartedly with Jane's 10:00:53 post. I've known for months what my primary trading goal was for this year--finding a way to vary my repertoire of income-producing trades so that my vega and other risks were better balanced. If I didn't have that goal, I wouldn't be listening to tons of webinars, studying lots of articles and attending meetings, looking for the types of trades that can do that for me. When markets permit, I began experimenting the last few months of last year when I could initiate a relatively safe trade and had time to concentrate on something new. I'm not there yet, and maybe this will be next year's goal, too. However, if I hadn't set the goal, I wouldn't be pointing my studying this particular direction, and I'd have less chance of discovering the right way to balance these risks. The very act of setting the goal brings me closer to achieving it.

And in case that last paragraph sounded just a bit too pompous, I'll add this: I just hope I don't have to lose a bunch of my carefully gathered profits in my search as I did one disastrous month last year when on my way to achieving last year's trading goal--finding a workable (for me) exit strategy for credit spreads. Smile.

Jeff Bailey : 2/22/2008 10:06:20 AM

US Oil Fund (USO) $77.66 +0.42% ...

Jeff Bailey : 2/22/2008 10:05:56 AM


DJ- Turkish troops launch a ground incursion across the border into Iraq in pursuit of separatist Kurdish rebels - a move that dramatically escalates Turkey's conflict with the militants.

Jane Fox : 2/22/2008 10:05:46 AM

One of the points I have in my trading plan is when I switch markets and/or timeframes ie under what conditions do I switch and what do I need to do before I switch. These were the points I needed to review before I made the move to the Russell yesterday. I now need to add the factor of how hard is that particular time frame to actually trade and that will be a very difficult factor to add. I believe the only way you can determine this is to trade it with real money so I will add, "When trying a new market and/or timeframe I will only trade one contract until I feel comfortable with it."

Jeff Bailey : 2/22/2008 10:05:04 AM


DJ- Germany's second-largest utility reports a 20% jump in net profit to euro 2.98 billion, below euro 3.14 billion average forecasts. Figure adjusted for sale of U.K. water unit Thames Water, non-recurring items. Shares fall 4.8% at the open.

Jeff Bailey : 2/22/2008 10:04:11 AM


DJ- Standard & Poor's cuts the credit ratings of GMAC and its Residential Capital unit further into junk territory as the firms face continued challenges in the current credit climate. Agency warns that further downgrades are possible.

Jeff Bailey : 2/22/2008 10:03:20 AM


DJ- The 788 China Fund, managed by Heritage Fund Management, loses 39.5% in January, following gains of 115% last year. The Golden China Fund, managed by Greenwoods Asset Management, loses 21.5% in January, following gains of 100.3% last year.

Jeff Bailey : 2/22/2008 10:02:39 AM


DJ- Shares of Fannie Mae fall 4% and Freddie Mac drops 6% after both companies are downgraded to sell from neutral By Merrill Lynch, which is taking a bearish view on the future for the mortgage-finance firms.

Linda Piazza : 2/22/2008 10:01:11 AM

Potential support for the SPX at 1339-1340 on 15-minute closes, but if that's broken, the 30-minute chart suggests the SPX could be headed to 1334.50. Don't count on these potential downside targets being met--don't count on anything in these markets--but do assess vulnerability to those levels. I said in last night's Wrap that if these were normal times, I would expect a drop maybe into that area and then a bounce attempt, and then . . . who knows what then, because the point is to see what happens then. A doji type day is certainly a possibility although so is a deeper decline. Just because everyone now expects any break to be "the" break warns the contrarian in me to be a little careful about assumptions.

Jane Fox : 2/22/2008 10:00:53 AM

I am working on my trading plan and business plan today. I have one, of course, but it needed a update and I am very glad I have taken the time to review it today.

Any trader who wants to trade for living has to have a business and a trading plan. There is not a small business owner (a successful small business owner) out there without a business plan and an operational plan. A trader's operational plan is his/her trading plan.

Keene Little : 2/22/2008 10:00:39 AM

ES and YM have now joined NQ in giving up this morning's pre-market rally. One of these days that kind of pre-market rally is going to hold but lately it's been a very nice short play setup. But it's only for a trade. We still have no idea where this market is going. The DOW and SPX are trying to hold onto their uptrend lines from the February lows.

Linda Piazza : 2/22/2008 9:56:35 AM

Watch the RUT this morning. It has dropped below a trendline across the lows since Friday. However, it dropped to potential Keltner support on 30-minute closes, with that support just below 694. The formation on the RUT's intraday charts suggests that we should get a bounce attempt, but other charts suggest this break could be significant, so here's what I'm fearing: I'm fearing that this is a test move, a possible fake-out move, to see if the break will be bought. My 15-minute charts actually show a potential short-term downside target of 688.70, but I consider the 694-690 and maybe even 694-700 zone an iffy kind of zone for the RUT. I'm not trading it today--at least I'm not unless some great APR credit spread opportunity presents itself--but I am watching it because the RUT was the first to break out of that triangle on its daily chart, but instead of falling, it's moved sideways out of it. Could that be what happens with other indices? Not that pent-up energy exploding one direction or the other, as so many expect now? I once expected it, too, but the very fact that so many now predict it makes the contrarian in me a little wary.

So far, the RUT looks as if it could indeed achieve that 688.70-ish target (where you should again watch for bounce potential) but just keep on your toes if you're leaning on the bearish side for the RUT in case it does end up bouncing from the support being tested.

Jane Fox : 2/22/2008 9:55:49 AM

I tried trading the Russell 2000 on the 233 tick chart yesterday and found it was not conducive to my way of trading. I do not suggest any trader switch back and forth from one timeframe to another or from one market to another unless both timeframes and/or markets are in your trading plan. The reason I switched to the Russell 2000 on the 233 was my backtesting showed it give me a better win/loss ratio but what the back testing did not show is how hard it actually is to trade. Yesterday showed me how much more concentration it requires and that it was not a timeframe I could handle long term.

I used to trade the Russell so I am not unfamiliar with the market but I never traded it on the quick 233 tick chart. A lesson very well learned.

I also see the Dow futures (YM) on the 377 tick starting to pick up again so I am now back to this market and timeframe. Looking back now I see that I this was a drawdown that I should have lived through but of course that is clear now.

Jeff Bailey : 2/22/2008 9:53:02 AM

Ambak (ABK) $8.58 -7.04% ...

Jeff Bailey : 2/22/2008 9:52:34 AM

MBIA Inc. (MBI) $10.98 -7.73% ...

Linda Piazza : 2/22/2008 9:49:08 AM

The USDJPY has been in a descending channel since yesterday morning. Early this morning, before the open, the USDJPY zoomed up to the top of that channel, but it's now retreating rather sharply through that channel again. It's at 106.99 as I type, with potential Keltner and channel support from about 106.70-106.82. If it keeps dropping that level should be watched for bounce potential, although the formation setting up above the channel's support line now looks a bit like a H&S formation. These formations do sometimes have a bit more relevance on the USDJPY than on equities, I've found, although that's not always true, of course. If the USDJPY should bounce from that potential support, of course, that would be a positive for equities, although the intermarket relationship is not always intact. If it instead plunges deeper, that would be negative for equities, although again the intermarket relationship is not always intact.

Linda Piazza : 2/22/2008 9:43:22 AM

The SPX's 30-minute 9-ema is at 1347.77. The SPX rose toward it but hasn't been able to top it yet. The 15-minute version is at 1345.62. The SPX is obviously above that as I type, at 1346.64, testing that 1346-1347.50 resistance as well as a descending trendline drawn off yesterday morning's high. It pierced that trendline earlier but is back below it as I type. It's early yet, not even the close of the first 15-minute period, so we shouldn't really draw conclusions too quickly. So far, all we can say is that resistance is holding.

Note: The SPX dropped back below the 15-minute 9-ema as I typed. It's at 1345.09 now.

Keene Little : 2/22/2008 9:37:33 AM

NQ has already given up the entire bounce off the 7:45 AM low.

Jane Fox : 2/22/2008 9:37:10 AM

The daily chart of the SPX may look unclear but I think it is very clear and telling us it is unclear as to which way it will break, up or down. Link

Linda Piazza : 2/22/2008 9:37:02 AM

Keltner outlook on the advdec line: the advdec line zoomed all the way up to potential resistance/potential breakout marker levels, now at about 533. The advdec line is now at 619, but that's not as big a violation as it appears, since the numbers on the advdec line are big and it moves quickly. Conclusion? Careful, bulls. Big advdec line gaps up to resistance in the morning are sometimes followed by a rollover in the advdec line. Tuesday, 2/19 was one example, although the resistance line being tested there was different.

However, there's a catch for bears. If the advdec line can roughly maintain these levels, perhaps consolidating but not dropping so deeply that it shows that the advdec was rebuffed from this resistance, there's the potential for a breakout situation and a new target of about 1365. So far, though, it looks as if the resistance is holding, at least, with the advdec line dropping as I typed this post. It's now at 385.

Jane Fox : 2/22/2008 9:33:10 AM

AD line opens at +500 and seems to have no desire to trend up or down. This is telling me we are in for a long day.

Keene Little : 2/22/2008 9:19:48 AM

Equity futures look like they got another "manufactured" rally from their lows around 7:45 this morning. I'm not sure it will have any better luck holding up than the other pre-market rallies this week. Someone is using the lighter volume pre-market sessions to drive futures higher to get a gap up open and then traders are using it as an opportunity to sell into. Will it be different this morning? Tough to tell in this environment but it's sure hard to trust.

Linda Piazza : 2/22/2008 9:18:06 AM

Futures are well above fair values as I type. If the SPX cash market gains in accordance with futures' action, something it doesn't always do, the gain will take the SPX right up into and perhaps past the 1346-1347 resistance zone and nearer 1350. My 30-minute charts show resistance in the 1346-1347.50 area and my 15-minute charts show significant potential resistance in the 1350-1352 area. I would certainly watch for a stalling in one of those areas and maybe even for rollover potential, depending on the breadth and other indicators. Remember that with Keltner setups, prices can initially push past that resistance, piercing it, then pull back by the close of the period, essentially being stalled at that resistance.

Jane Fox : 2/22/2008 9:14:38 AM

Crude has once again tested $100/bl and once again was not able to break through and close above that venerable number. Interestingly though I see the MACD has caught up with price and there is no longer a MACD divergence. Link

Jane Fox : 2/22/2008 9:11:25 AM

I keep saying expect a retracement in the Gold market and I just never get "enough" of a retracement. The last time I thought it should retrace to 850 it made it down to 855 and then bounced (and lost a bet). This time the MACD is telling me it is headed for another retracement that could retrace back to at least 890. One would think that 900 would be support but it was not resistance on its way up so I do not see it being support on the way down. Link

Jane Fox : 2/22/2008 9:06:32 AM

Overnight all markets mostly just bumped along the bottom of their respective previous day ranges however the big cap markets (ES, YM and NQ) have all just made higher overnight highs. the only market that did not make a higher overnight high was the Russell 2000 futures, ER2.

Look for the Russell to be the weaker market intraday. Link

Market Monitor Archives